Dollar Takes Hit as Japan's Intervenes, Fed Leaves Rates Unchanged

The US Dollar Index (DXY) fell sharply on Thursday as concerns grew that Japanese authorities intervened in the foreign exchange market to support the yen. The index dropped nearly 0.80% to around 100, its lowest level since June 17. This decline was largely driven by a surge in the Japanese Yen (JPY), which rose by over 2.5% against the US Dollar.

The move may have been prompted by Japan's efforts to counteract the negative effects of a strong currency on exports. However, Tokyo has not officially confirmed any intervention.

Meanwhile, the Federal Reserve left interest rates unchanged at 3.50%-3.75%, with three policymakers voting for a 25-basis-point rate hike. Fed Chair Kevin Warsh reiterated the central bank's commitment to restoring price stability.

The US Bureau of Economic Analysis reported that the economy expanded at an annualized pace of 1.5% in the second quarter, falling short of the 2.1% forecast and slowing from the first quarter's 2.1% growth.